Before signing a deal with TSMC, Apple tried to establish a manufacturing relationship with Intel, but something went wrong. TSMC founder Morris Chang recalls the details of this story.
When Apple started building its own processors in 2009-2010, it initially used the Samsung Foundry. After the chips became a key advantage of the iPhone over its competitors in the early 2010s, the company started looking for other manufacturers for competitive reasons.
Apple considered using Intel Custom Foundry (ICF) or Texas Instruments, but quickly realized that ICF was not designed for external customers, and TI did not have an advanced process. As a result, the company chose TSMC as its exclusive supplier, as Morris Chang told Acquired.
«Intel’s [CEO] approached Tim Cook and asked him to consider Intel — at the time, Intel was the main supplier for Apple’s Mac line. I knew a lot of Intel customers in Taiwan […] none of them liked Intel [because they] always acted like they were the only ones [making] microprocessors. […] In the lithography business, TSMC […] doesn’t compete with customers. And even if Intel is trying to do business in good faith, they will have a conflict of interest,» Chang recalls.
When Intel’s then CEO Paul Otellini approached Tim Cook in early 2011, Apple suspended talks with TSMC for two months to evaluate the proposal. Morris Chang, concerned about this pause, visited Apple’s headquarters to check on the situation. During a private meeting, Tim Cook assured Chang that Apple would not choose Intel.
«Intel just doesn’t know how to be a factory», — said Tim Cook.
Intel lacked the customer-centric thinking required for the lithography business. Unlike TSMC, which adapts its processes to meet customer needs, Intel was used to designing and manufacturing its own chips and had a hard time adapting to serving third-party customers. On the contrary, Apple valued TSMC’s ability to listen and respond to specific requirements, which was difficult for Intel.
«When a client asks a lot of things, we learned to answer every request. Some of them were crazy, some of them were irrational, [but] we politely answer every request. […] Intel never did that, I knew a lot of Intel customers here in Taiwan, and everyone would like to have a different supplier,» says Chang.
notes that Intel has been working to overcome these issues with an update to Intel Foundry, which now also offers support for industry-standard design tools that were missing during the events.
At the time, TSMC was planning to move from 28nm to 16nm FinFET process, but Apple wanted to introduce its own 20nm process. At the time, TSMC did not have enough R&D teams to develop two processes at the same time, so the company had to redirect people to meet Apple’s needs in 2014.
Although Apple ordered the A8 and A9 processors on 20nm and 16nm processes from Samsung and TSMC, Apple eventually committed to working with TSMC to produce all future processors. The production of Apple Silicon has strengthened TSMC’s position as an exclusive supplier, as different Apple processors have quite a lot in common.
The decision to meet Apple’s requirements was critical for TSMC to overtake Intel as the world’s leading semiconductor manufacturer. Apple gives TSMC predictable large order volumes, helping to justify significant capital and R&D investments.
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